Contractors provide essential flexibility for small businesses, the Recruitment and Employment Confederation has said.

Tom Hadley, director of policy and professional services at the confederation, said that contractors allow small businesses to take on staff quickly as and when they need to.

"There's been an increase in temping, and looking ahead we think that trend might well accelerate because there's an indication that employers will be using flexible staffing whilst there is still a lot of economic uncertainty and people are naturally cautious about taking on permanent staff," he continued.

Meanwhile, the Bank of Scotland's labour market barometer found the demand for temporary staff in Scotland increased more rapidly than it had since 2007 during December 2010.

In addition, this rise in contractors came alongside a steady increase in permanent staff, with the highest demand for temporary staff coming from the nursing, medical and caring professions.